the broadband availability gap

O B I T e c h n I c a l P a P e r n O . 1

F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | a P r I l 2 0 1 0

The BroadBandavailaBiliTy

GapOBI TechnIcal PaPer nO. 1


F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P I

TaBle Of cOnTenTs

List of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III

List of Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VIII

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

I The Investment Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5Creating .the .Base-Case .Scenario .and .Output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

II Broadband Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Current .State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17Future .State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

III Calculating the Investment Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Key .Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Key .Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Key .Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

IV Network Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Basic .Network .Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Last-mile .Technology .Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59Technologies .Included .in .the .Base .Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Wireless Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6212,000-foot-loop DSL (Digital Subscriber Line) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84Satellite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Technologies .Not .Included .in .the .Base .Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94Fiber-to-the-premises (FTTP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 943,000 5,000 foot DSL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9815,000 foot DSL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Hybrid Fiber-Coax Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Network .Dimensioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Middle-Mile .Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114

List of Common Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130

List of Technical Paper Contributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137


F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P I I I

lIsT Of exhIBITs

Exhibit .A: . Approach .to .Determining .the .Availability .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Exhibit .1-A: . Base-case .Broadband .Availability .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Exhibit .1-B: . Breakout .of .Ongoing .Costs .by .Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Exhibit .1-C: . Gap .by .Census .Blocks .Ordered .by .Population .density . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Exhibit .1-D: . Broadband .Investment .Gap .per .County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7

Exhibit .1-E: . Broadband .Investment .Gap .per .Housing .Unit .in .Each .County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8

Exhibit .1-F: . Density .of .Unserved .Housing .Units .per .Square .Mile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Exhibit .1-G: . Broadband .Investment .Gap, .by .County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Exhibit .1-H: . Ongoing .Support .for .Each .Housing .Unit .per .Month . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Exhibit .1-I: . Investment .Gap .per .Housing .Unit .by .Lowest-Cost .Technology .for .Each .County . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Exhibit .1-J . . Lowest .Cost .Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Exhibit .2-A: . Highest .Speed .Capability .of .Available .Wired .Broadband .Networks .in .the .United .States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Exhibit .2-B: . Availability .of .Broadband .Networks .Capable .of .Meeting .the .National .Broadband .Target . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Exhibit .2-C: . Population .Density .of .the .United .States, .Per .Square .Mile .of .Inhabited .Census .Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Exhibit .2-D: . Population .Density .of .the .Unserved, .Per .Square .Mile .of .Inhabited .Census .Block . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Exhibit .2-E: . Statistics .of .Urban .Areas/ .Clusters, .and .All .Other .Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Exhibit .2-F: . Linear .Density .of .the .United .States, .Ratio .of .Road .Mile .to .Housing .Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Exhibit .2-G: . Linear .Density .of .the .Unserved, .Ratio .of .Road .Miles .to .Housing .Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Exhibit .2-H: . Cable .Broadband .Deployment .for .a .Few .Large .MSOs .as .a .Percentage .of .Homes .Passed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Exhibit .2-I: . Assumptions .Required .to .Use .Tract-Level .Data .Likely .Overestimate .Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Exhibit .2-J: . Aligning .Infrastructure .with .Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Exhibit .2-K: . Publicly .Announced .Wired .Broadband .Upgrades . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Exhibit .2-L: . With .the .Exception .of .Satellite, .Most .Announced .Broadband .Deployments .are .Completed .on .Schedule . . . . . . . . . . . . .27

Exhibit .2-M: . Projected .2013 .Availability .of .Broadband .Capable .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27

Exhibit .2-N: . Publicly .Announced .4G .Wireless .Deployments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Exhibit .2-O: . Specific .Company .Historical .Performance .Against .Announced .Completion .Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Exhibit .2-P: . Publicly .Announced .Total .Near .Term .Satellite .Broadband .Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

I V F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v


Exhibit .2-Q: . Commercial .Data .Sources .Used .to .Calculate .Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Exhibit .2-R: . Public .Data .Sources .Used .to .Calculate .Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Exhibit .3-A: . Impact .of .Discount .Rate .on .Investment .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Exhibit .3-B: . Incremental .Network .Elements .Necessary .to .Upgrade .a .Telephone .Network .to .Offer .Broadband . . . . . . . . . . . . . . . . . . . . . . . . 35

Exhibit .3-C: . Incremental .Revenue .by .Product .and .Network .Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Exhibit .3-D: . Gap .for .Funding .One .Wired .and .One .Wireless .Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Exhibit .3-E: . The .Cost .of .Funding .Two .Wired .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Exhibit .3-F: . Quantifying .the .Treatment .of .Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Exhibit .3-G: . Quantifying .the .Impact .of .Competition: .Investment .Gap .by .Number .of .Providers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Exhibit .3-H . . Broadband .Investment .Gap, .by .Percent .of .Unserved .Housing .Units .Served . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Exhibit .3-I: . . Total .Investment .Cost .for .Various .Upgrade .Paths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Exhibit .3-J: . Distribution .of .Users .by .Actual .Maximum .Download .Speeds .(Mbps) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Exhibit .3-K: . Actual .Download .Speeds .Necessary .to .Run .Concurrent .Applications .(Mbps) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Exhibit .3-L: . .Typical .(Median) .Up .To .Advertised .Download .Speeds .of .Most .Commonly .Deployed .and .Chosen .Consumer .Household .Broadband .(Mbps) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

Exhibit .3-M: . Dependence .of .the .Broadband .Investment .Gap .on .Speed .of .Broadband .Considered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Exhibit .3-N: . Broadband .Take-Rate .Drivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Exhibit .3-O: . Model .for .Technology .Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Exhibit .3-P: . Modeled .Cumulative .Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Exhibit .3-Q: . Incremental .Adoption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Exhibit .3-R: . Broadband .Adoption .Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

Exhibit .3-S: . Gompertz .Curves .for .Broadband .Take .Rate .With .Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Exhibit .3-T: . Assumed .Percentage .of .Customers .with .Bundles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Exhibit .3-U: . Sensitivity .of .Gap .to .Take .Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Exhibit .3-V: . Summary .of .Modeled .ARPUs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Exhibit .3-W: . ARPU .Sensitivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Exhibit .3-X: . Elevation .Across .the .U .S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Exhibit .3-Y: . Estimated .Average .Cell .Size .in .Each .County .and .Terrain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Exhibit .3-Z: . Sensitivity .of .Build-Out .Cost .and .Investment .Gap .to .Terrain .Classification .Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Exhibit .4-A: . Basic .Network .Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59


F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P V

Exhibit .4-B: . . Streaming .Capacity .of .Modeled .Broadband .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Exhibit .4-C: . . Present .Value .of .Total .Costs .for .All .Technologies .in .Unserved .Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Exhibit .4-D: . Different .Wireless .Technology .Families .Have .Evolved .Over .Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Exhibit .4-E: . . Downlink .and .Uplink .Spectral .Efficiencies .by .Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Exhibit .4-F: . Evolution .of .Round-Trip .Latencies .in .Wireless .Networks, .in .Milliseconds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Exhibit .4-G: . Publicly .Announced .4G .Wireless .Deployments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

Exhibit .4-H: . Approach .for .Analyzing .Cost .of .FWA .Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Exhibit .4-I: . Methodology .for .Determining .Maximum .Cell .Radius .for .Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Exhibit .4-J: . . Link .Budget .for .Delivering .1 .26 .Mbps .Uplink .Speeds .at .700MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Exhibit .4-K: . Classification .of .Terrain .of .Census .Tracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Exhibit .4-L: . Maximum .Cell .Radius .for .Adequate .Coverage .in .the .700MHz .Band . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Exhibit .4-M: . Propagation .Loss .for .Different .Terrain .Types .at .700MHz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Exhibit .4-N: . Average .Cell .Size .in .Each .County .(in .miles) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Exhibit .4-O: . Coverage .of .Unserved .Housing .Units .by .Cell .Radius . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Exhibit .4-P: . Methodology .for .Dimensioning .Wireless .Networks .to .Provide .Adequate .Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72

Exhibit .4-Q: . Maximum .Number .of .Subscribers .Per .Cell .Site .in .an .FWA .Network .with .Directional .Antennas .at .the .CPE . . . . . . . .72

Exhibit .4-R: . . Impact .of .Directional .Antennas .at .CPE .on .SINR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73

Exhibit .4-S: . Spectrum .Needs .for .Cell .Sites .in .2020 .and .2030, .Based .on .BHOL .of .160 .kbps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74

Exhibit .4-T: . Average .and .Peak .Capacity .of .a .3-Sector .Cell .Site .Relative .to .Backhaul .Speeds, .Mbps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75

Exhibit .4-U: . Hybrid .Fiber .Microwave .Backhaul .Architecture .for .Cellular .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76

Exhibit .4-V: . Illustrative .Wireless .Network .Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77

Exhibit .4-W: . Investment .Gap .for .Wireless .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

Exhibit .4-X: . Total .Investment .per .Housing .Unit .(HU) .and .Investment .Gap .per .HU .by .Cell .Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

Exhibit .4-Y: . .Sensitivity .of .Investment .Gap .to .Terrain .ClassificationChange .in .Costs .and .Investment .Gap .by .Changing .Terrain .Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Exhibit .4-Z: . Sensitivity .of .Costs .and .Investment .Gap .to .Subscriber .Capacity .Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Exhibit .4-AA: . .Impact .of .Spectrum .Availability .on .FWA .Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

Exhibit .4-AB: . Cost .Breakdown .of .Wireless .Network .Over .20 .Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Exhibit .4-AC: . Breakdown .of .Total .Site .Costs .for .Wireless .Network .in .Unserved .Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

Exhibit .4-AD: . Cost .of .an .HFM .Second-Mile .Backhaul .Architecture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

V I F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v


Exhibit .4-AE: . Cost .Assumptions .and .Data .Sources .for .Wireless .Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82

Exhibit .4-AF: . Breakout .of .Voice .Line .Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Exhibit .4-AG: . Telco-Plant .Upgrades .to .Support .Broadband . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

Exhibit .4-AH: . . Downstream .Speed .of .a .Single .ADSL2+ .Line .as .a .Function .of .Loop .Length .(24 .AWG) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Exhibit .4-AI: . . DSL .Network .Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

Exhibit .4-AJ: . Capacity .of .a .DSL .NetworkSimultaneous .Streams .of .Video .in .a .DSL .Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

Exhibit .4-AK: . Economic .Breakdown .of .12,000-foot .DSL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87

Exhibit .4-AL: . Data .Sources .for .DSL .Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

Exhibit .4-AM: . Available .Satellite .Capacity .Through .2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

Exhibit .4-AN: . Satellite .Usage .Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Exhibit .4-AO: . Satellite .Capacity .Based .on .Low, .Medium .and .High .Usage .Scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

Exhibit .4-AP: . Economics .of .Terrestrially .Served .if .Most .Expensive .Housing .Units .are .Served .with .Satellite . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92

Exhibit .4-AQ: . Location .of .Highest-Gap .Housing .Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

Exhibit .4-AR: . Satellite .Capex .per .Subscriber . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

Exhibit .4-AS: . Capabilities .of .Passive .Optical .Networks .(PON) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Exhibit .4-AT: . Passive .Optical .Network .(PON) .FTTP .Deployment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Exhibit .4-AU: . Future .PON .Architectures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Exhibit .4-AV: . Breakout .of .FTTP .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

Exhibit .4-AW: . . Cost .to .Pass .with .FTTP .by .Density .of .Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Exhibit .4-AX: . Simple .Financial .Model .to .Calculate .Breakeven .EBITDA .for .FTTP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97

Exhibit .4-AY: . Esitmated .Monthly .EBITDA .Required .to .Break .Even .on .an .FTTP .Build .Across .the .Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Exhibit .4-AZ: . Data .Sources .for .FTTP .Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98

Exhibit .4-BA: . Downstream .Speed .of .a .Single .VDSL2 .Line .at .Various .Loop .Lengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Exhibit .4-BB: . Upstream .Speed .of .a .Single .VDSL2 .Line .at .Various .Loop .Lengths . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Exhibit .4-BC: . Downstream .Speed .of .VDSL2 .Variants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Exhibit .5-BD: . Upstream .Speed .of .VDSL2 .Variants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Exhibit .4-BE: . Breakout .of .3,000-Foot .DSL .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

Exhibit .4-BF: . Breakout .of .5,000-Foot .DSL .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Exhibit .4-BG: . Breakout .of .15,000-Foot .DSL .Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

Exhibit .4-BH: . Breakout .of .Cable .Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103


F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P V I I

Exhibit .4-BI: . Upgrades .to .Enable .Broadband .Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

Exhibit .4-BJ: . Spectrum .Allocation .in .Cable .Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105

Exhibit .4-BK: . Cable .Video .ARPU .Over .Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106

Exhibit .4-BL: . Upgrade .Costs .for .Cable .Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

Exhibit .4-BM: . Outside .Plant .Cost, .FTTP .or .RFoG .vs . .HFC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .107

Exhibit .4-BN: . . HFC .Plant .Diagram . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Exhibit .4-BO: . Data .Sources .for .HFC .Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Exhibit .4-BP: . Differences .Between .Voice .and .Data .Networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Exhibit .4-BQ: . Monthly .Usage .and .BHOLs .by .Speed .Tier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Exhibit .4-BR: . Usage .by .Tier .and .BHOL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Exhibit .4-BS: . Expected .Future .BHOL .in .Broadband .Network .Dimensioned .to .Deliver .4 .Mbps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Exhibit .4-BT . .Likelihood .of .Achieving .a .Burst .Rate .Greater .Than .4 .Mbps .at .Different .Oversubscription .Ratios .with .a .Varying .Number .of .Subscribers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Exhibit .4-BU: . Breakout .of .Middle, .Second .& .Last .Mile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Exhibit .4-BV: . . Topology .Used .for .Middle-Mile .Cost .Modeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116

Exhibit .4-BW: . Calculated .Telco .Fiber .Routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Exhibit .4-BX: . Classification .of .Central .Offices .for .Creating .Fiber .Map . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Exhibit .4-BY: . Middle-Mile .Cost .Dependency .on .Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

Exhibit .4-BZ: . Middle-Mile .Build .vs . .Lease .Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121

V I I I F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v


lisT of assumpTions

This .table .provides .important .information .about .the .different .assumptions .used .in .the .creation .of .charts .throughout .this .docu-ment . . .The .assumptions .implicit .in .each .chart .are .appropriate .for .the .context .in .which .the .chart .appears . . .However, .it .may .be .the .case .that .assumptions .vary .between .similar .charts, .leading .to .what .appear .to .be .different .results . . .This .table .synthesizes .the .dif-ferent .assumptions .to .allow .the .reader .to .interpret .and .compare .charts .in .this .document .

Chart Description Technology

Key assumptions

4G Areas Non-4G areas

1-A Base-case Broadband Availability Gap Profitable counties are excluded.

12,000-foot DSL Assumes one competitor. Assumes no competitors.

Fixed Wireless Assumes no competitors. Applies a 73.13% cost allocation to the fixed network. Recognizes only Fixed revenue as incremental.

Assumes no competitors.Recognizes Fixed and Mobile revenue as incremental.

1-B Breakout of Ongoing Costs by Category Profitable counties are excluded.



Assumes no competitors. Recognizes Fixed and Mobile revenue as incremental.

1-C Gap by Census Blocks Ordered by Population densityThe second lowest cost technology is determined at the county level and assigned to the census blocks. All unserved census blocks then are sorted into centiles by their gap.




1-D Broadband Investment Gap per County




1-E Broadband Investment Gap per Housing Unit in Each County




1-G Broadband Investment Gap, by County Profitable counties are excluded.




1-H Ongoing Support for Each Housing Unit per Month




1-I Investment Gap per Housing Unit by Lowest-Cost Technology for Each County





F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P I X


Key assumptions


1-J Lowest Cost TechnologyAll unserved areas are included.




3-A Impact of Discount Rate on Investment Gap Profitable counties are excluded.




3-D Gap for Funding One Wired and One Wireless Network Profitable counties for each technology are excluded.




3-E The Cost of Funding Two Wired Networks Profitable counties for each technology are excluded.

12,000-foot DSL Assumes one competitor. Assumes one competitor.

FTTP Assumes one competitor. Assumes one competitor.

3-G Quantifying the Impact of Competition: Investment Gap by Number of ProvidersProfitable counties are excluded.

12,000-foot DSL Assumes 0-3 competitors as indi-cated by label.

Assumes 0-3 competitors as indi-cated by label.

Fixed Wireless Assumes 0-3 competitors as indi-cated by label. Applies a 73.13% cost allocation to the fixed network.Recognizes only Fixed revenue as incremental.

Assumes 0-3 competitors as indi-cated by label.Recognizes only Fixed revenue as incremental.

3-H Broadband Investment Gap by Percent of Unserved Housing UnitsThe second-lowest-cost technology is determined at the county level and assigned to the census blocks. All unserved census blocks then are sorted into centiles by their gap.


Fixed Wireless Assumes no competitors.Applies a 73.13% cost allocation to the fixed network.Recognizes only Fixed revenue as incremental.


3-I Total Investment Cost for Various Upgrade Paths


Fixed Wireless Assumes no competitors.Applies a 73.13% cost allocation to the fixed network.

Assumes no competitors.



FTTP Assumes one competitor. Assumes no competitors.

3-M Dependence of the Broadband Investment Gap on Speed of Broadband ConsideredProfitable counties are excluded.







FTTP Assumes one competitor. Assumes no competitors.

HFC Assumes one competitor. Assumes no competitors.

X F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v



Key assumptions


3-U Sensitivity of Gap to Take Rate Profitable counties are excluded.




3-W ARPU Sensitivity Profitable counties are excluded.

12,000-foot DSL Assumes one competitor. Assumes no competitors



3-Z Sensitivity of Build-Out Cost and Investment Gap to Terrain Classification Parameters Profitable counties are excluded.



4-C Present Value of Total Costs for All Technologies in Unserved Areas The second lowest cost technology is determined at the county level and assigned to the census blocks. All unserved census blocks then are sorted into centiles by their gap.

12,000-foot DSL Assumes no competitors. Assumes no competitors.





FTTP Assumes no competitors. Assumes no competitors.

Cable Assumes no competitors. Assumes no competitors.

4-W Investment Gap for Wireless networksProfitable counties are excluded.



4-Y Sensitivity of Investment Gap to Terrain Classification Profitable counties are excluded.



4-Z Sensitivity of Costs and Investment Gap to Subscriber Capacity Assumptions Profitable counties are excluded.



4-AA Impact of Spectrum Availability on FWA Economics Considers all unserved areas for first column of data; profitable counties are excluded in the other columns.



4-AB Cost Breakdown of Wireless Network Over 20 Years Considers all unserved areas (including profitable counties).



4-AC Cost of Deploying a Wireless Network in Unserved Areas Considers all unserved areas (including profitable counties).




F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P X I


Key assumptions


4-AD Cost of an HFM Second Mile Backhaul Architecture



4-AK Economic Breakdown of 12,000-foot DSLProfitable counties are excluded.


4-AP Economics of Terrestrially Served if Most Expensive Housing Units are Served with SatelliteIncludes all unserved areas (including profitable counties).




4-AV Breakout of FTTP GapProfitable counties are excluded.

FTTP Assumes no competitors. Assumes no competitors.

4-BE Breakout of 3,000-Foot DSL Gap Profitable counties are excluded.


4-BF Breakout of 5,000-Foot DSL Gap Profitable counties are excluded.


4-BG Breakout of 15,000-Foot DSL Gap Profitable counties are excluded.


X I I F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v


O B I T e c h n I c a l P a P e r n O . 1 I n T r O d u c T O n

F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | T h e B r O a d B a n d a v a I l a B I l I T y G a P 1

InTrOducTIOnThe .American .Recovery .and .Reinvestment .Act .directed .the .Federal .Communications .Commission .(FCC) .to .include, .as .part .of .the .National .Broadband .Plan .(NBP), .an .analysis .of .the .most .effective .and .efficient .mechanisms .for .ensuring .broad-band .access .by .all .people .of .the .United .States .1 .As .the .NBP .indicated, .the .level .of .additional .funding .to .extend .broadband .to .those .who .do .not .have .access .today .is .$23 .5 .billion; .more .detail .about .the .gap .and .results .of .this .analysis .are .presented .in .Chapter .2 . .This .document .details .the .underlying .analyses, .assumptions .and .calculations .that .support .the .$23 .5 .billion .funding .gap .2

The .question .implicit .in .the .Congressional .mandate .is .deceptively .simple: .What .is .the .minimum .level .of .public .sup-port .necessary .to .ensure .that .all .Americans .have .access .to .broadband? .In .fact, .there .are .multiple .layers .of .complexity: .The .analysis .must .account .for .existing .deployments, .both .to .the .extent .that .they .enable .current .service .and .can .be .used .to .extend .service .to .currently .unserved .areas; .and .it .must .include .an .analysis .of .the .capabilities .and .economics .of .different, .

competing .technologies .that .can .provide .service . .The .analysis .therefore .comprises .two .main .components: .The .first .focuses .on .Availability, .or .understanding .the .state .of .existing .network .deployments .and .services; .the .second .focuses .on .the .Funding Shortfall, .the .capabilities .and .economics .associated .with .differ-ent .broadband .networks .3 .See .Exhibit .A .

The .Availability .analysis .focuses .on .determining .the .state .of .existing .deployments: .who .has .access, .and .of .greater .concern, .who .lacks .access .to .broadband .consistent .with .the .National .Broadband .Availability .Target . .In .addition, .this .analysis .must .develop .a .key .input .to .the .Funding .Shortfall .analysis: .data .regarding .the .location .of .existing .network .infrastructure .to .fa-cilitate .determining .the .cost .of .extending .service .into .unserved .areas . .Developing .this .detailed .baseline .requires .a .very .granu-lar .geographic .view .of .the .capabilities .of .all .the .major .types .of .broadband .infrastructure .as .they .are .deployed .today, .and .as .they .will .likely .evolve .over .the .next .three .to .five .years .without .public .support . .

Unfortunately, .there .is .a .lack .of .data .at .the .required .level .of .granularity, .both .in .terms .of .availabilitywhich .people .have .access .to .what .servicesand .of .infrastructurewhich .people .are .passed .by .what .types .of .network .hardware . .To .solve .the .problem, .we .combine .several .data .sets .for .availability .and .infrastructure, .supplementing .nationwide .data .with .the .output .of .a .large .multivariate .regression .model . .We .use .this .regression .model .to .predict .availability .by .speed .tier .and .to .fill .in .gaps, .especially .last-mile .gaps, .in .our .infrastructure .data . .The .ap-proach .to .developing .this .baseline .is .described .in .Chapter .2 .

The .second .major .component .focuses .on .the .Funding Shortfall .by .examining .the .capabilities .and .economics .of .differ-ent .network .technologies . .To .facilitate .this .analysis, .we .built .a .robust .economic .model .that .calculates .the .amount .of .support .necessary .to .upgrade .or .extend .existing .infrastructure .to .the .unserved .to .provide .service .consistent .with .the .target . .The .eco-nomic .analysis .builds .on .the .infrastructure .dataknown .and .inferredfrom .the .first .step, .calculating .the .cost .to .augment .existing .infrastructure .to .provide .broadband .service .consistent .with .the .target .for .multiple .technologies .

This .calculation .ultimately .provides .the .gap .between .likely .commercial .deployments .and .the .funding .needed .to .extend .universal .broadband .access .to .the .unserved . .Underlying .the .models .construction .are .a .number .of .principles .that .guided .its .design .

Only profitable business cases will induce incremen-tal network investments. .Private .capital .will .only .be .available .to .fund .investments .in .broadband .networks .where .it .is .possible .to .earn .returns .in .excess .of .the .cost .of .capital . .In .short, .only .profitable .networks .will .at-tract .the .investment .required . .Cost, .while .a .significant .

.

The Broadband Availability Gap ModelModels are one tool to analyze complex problems such as the

Broadband Availability Gap. It is important to recognize, however, that models have limits. An engineering-based, multi-technology economic model of broadband deployment, like the one created as part of the National Broadband Plan (NBP) effort, requires a multitude of inputs and can be used to answer many different questions. The types of inputs range from simple point estimates, such as the cost of a piece of hardwarea Digital Subscriber Line Access Multiplexer (DSLAM) card or chassis, for example es-timates of per-product revenue, assumptions about the evolution of competitive dynamics in different market segments and the likely behavior of service providers. We form hypotheses about all of these types of inputs to calculate the Broadband Availability Gap; of necessity, some of these hypotheses are more specula-tive than others.

This paper describes the design and use of this model in providing input into the NBP, as well as the underlying views about the relevant technologies. Others may make different assump-tions or test different hypotheses or seek to answer somewhat different questions. The model and its associated documentation provide an unprecedented level of transparency and should spur debate. The intent is for this debate to ultimately improve our understanding of the economics related to offering broadband service so that public policy can be made in a data-driven manner.

BOX A

2 F e d e r a l c O m m u n I c a T I O n s c O m m I s s I O n | W W W . B r O a d B a n d . G O v


driver .of .profitability, .is .not .sufficient .to .measure .the .attractiveness .of .a .given .build; .rather, .the .best .measure .of .profitability .is .the .net .present .value .(NPV) .of .a .build . .This .gap .to .profitability .in .unserved .areas .is .called .the .Broadband .Availability .Gap .in .the .NBP; .throughout .this .paper, .we .will .refer .to .this .financial .measure .as .the .Investment .Gap .

Investment decisions are made on the incremental value they generate. .While .firms .seek .to .maximize .their .overall .profitability, .investment .decisions .are .evaluated .based .on .the .incremental .value .they .provide . .In .some .in-stances, .existing .assets .reduce .the .costs .of .deployment .in .a .given .area . .The .profitability .of .any .build .needs .to .reflect .these .potential .savings, .while .including .only .incremental .revenue .associated .with .the .new .network .build-out .

capturing the local (dis-)economies of scale that drive local profitability requires granular calculations of costs and revenues. .Multiple .effects, .dependent .on .local .conditions, .drive .up .the .cost .of .providing .service .in .areas .that .currently .lack .broadband: .Lower .(linear) .densities .and .longer .distances .drive .up .the .cost .of .construction, .while .providing .fewer .customers .over .whom .to .amortize .costs . .At .the .same .time, .lower-port-count .electron-ics .have .higher .costs .per .port . .In .addition, .these .lower .

densities .also .mean .there .is .less .revenue .available .per .mile .of .outside .plant .or .per .covered .area . .

network-deployment decisions reflect service-area economies of scale. .Telecom .networks .are .designed .to .provide .service .over .significant .distances, .often .larger .than .five .miles . .In .addition, .carriers .need .to .have .suffi-cient .scale, .in .network .operations .and .support, .to .provide .service .efficiently .in .that .local .area .or .market . .Given .the .importance .of .reach .and .the .value .of .efficient .operations, .it .can .be .difficult .to .evaluate .the .profitability .of .an .area .that .is .smaller .than .a .local .service .area .

Technologies must be commercially deployable to be considered part of the solution set. .Though .the .economic .model .is .forward-looking .and .technologies .continue .to .evolve, .the .model .only .includes .technologies .that .have .been .shown .to .be .capable .of .providing .carrier-class .broadband . .While .some .wireless .4G .technologies .arguably .have .not .yet .met .this .threshold, .successful .market .tests .and .public .commitments .from .carriers .to .their .deployment .provide .some .assurance .that .they .will .be .capable .of .providing .service .

Implicit .within .the .$23 .5 .billion .gap .are .a .number .of .key .decisions .about .how .to .use .the .model . .These .decisions .reflect .

Exhibit A:Approach to Determining the Availability Gap4

Availability

Number of unserved andtheir proximity to currentbroadband infrastructure

Current stateHFC, telco and wirelessavailability calculatedindependentlyUsed best available data fromcommercial and governmentsourcesFilled data gaps with astatistical model

Future stateBased on publicannouncements

7.0 million unserved homes

Funding shortfall

Funding required to induceoperators to deploy

ubiquitous broadband

Key principlesNPV analysisIncremental economicsSufficiently granularEconomies of scaleTechnologically conservativeKey decisionsFund only one networkMarket based disbursementTerrestrial coverage for allAccount for 4G build outProven use cases

$23.5 billion availability gap

O B I T e c h n I c a l P a P e r n O . 1 I n T r O d u c T O n


beliefs .about .the .role .of .government .support .and .the .evolution .of .service .in .markets .that .currently .lack .broadband . .In .short, .these .decisions, .along .with .the .assumptions .that .follow, .describe .how .we .used .the .model .to .create .the .$23 .5 .billion .base .case .

Fund only one network in each currently unserved geographic area. .The .focus .of .this .analysis .is .on .areas .where .not .even .one .network .can .operate .profitably . .In .order .to .limit .the .amount .of .public .funds .being .provided .to .private .network .operators, .the .base .case .includes .the .gap .for .funding .only .one .network . .

capture likely effects of disbursement mechanisms on support levels. .Decisions .about .how .to .disburse .broadband-support .funds .will .affect .the .size .of .the .gap . .Market-based .mechanisms, .which .may .help .limit .the .level .of .government .support .in .competitive .markets, .may .not .lead .to .the .lowest .possible .Investment .Gap .in .areas .currently .unserved .by .broadbandareas .where .it .is .dif-ficult .for .even .one .service .provider .to .operate .profitably .

Focus on terrestrial solutions, but not to the exclu-sion of satellite-based service. .Satellite-based .service .has .some .clear .advantages .relative .to .terrestrial .service .for .the .most .remote, .highest-gap .homes: .near-ubiquity .in .service .footprint .and .a .cost .structure .not .influenced .by .low .densities . .However, .satellite .service .has .limited .capacity .that .may .be .inadequate .to .serve .all .consum-ers .in .areas .where .it .is .the .lowest-cost .technology . .Uncertainty .about .the .number .of .unserved .who .can .receive .satellite-based .broadband, .and .about .the .impact .of .the .disbursement .mechanisms .both .on .where .satellite .ultimately .provides .service .and .the .size .of .the .Investment .Gap, .all .lead .us .to .not .explicitly .include satellite .in the .base-case .calculation . .

support any technology that meets the network requirements. .Broadband .technologies .are .evolving .rapidly, .and .where .service .providers .are .able .to .oper-ate .networks .profitably, .the .market .determines .which .technologies .win . .Given .that, .there .appears .to .be .little-to-no .benefit .to .pick .technology .winners .and .losers .in .areas .that .currently .lack .broadband . .Therefore, .the .base .case .includes .any .technology .capable .of .providing .service .that .meets .the .National .Broadband .Availability .Target .to .a .significant .fraction .of .the .unserved .

Provide support for networks that deliver proven use cases, not for future-proof build-outs. .While .end-users .are .likely .to .demand .more .speed .over .time, .the .evolution .of .that .demand .is .uncertain . .Given .current .trends, .build-ing .a .future-proof .network .immediately .is .likely .more .expensive .than .paying .for .future .upgrades .

Also .implicit .in .the .$23 .5 .billion .gap .are .a .number .of .major .assumptions . .In .some .sense, .every .input .for .the .costs .of .net-work .hardware .or .for .the .lifetime .of .each .piece .of .electronics .is .an .assumption .that .can .drive .the .size .of .the .Investment .Gap . .The .focus .here .is .on .those .selected .assumptions .that .may .have .a .disproportionately .large .impact .on .the .gap .or .may .be .particu-larly .controversial . .By .their .nature, .assumptions .are .subject .to .disagreement; .Chapter .3 .includes .an .estimate .of .the .impact .on .the .gap .for .different .assumptions .in .each .case .

. Broadband .service .requires .4 .Mbps .downstream .and .1 .Mbps .upstream .access-network .service .

. The .take .rate .for .broadband .in .unserved .areas .will .be .comparable .to .the .take .rate .in .served .areas .with .similar .demographics .

. The .average .revenue .per .product .or .bundle .will .evolve .slowly .over .time .

. In .wireless .networks, .propagation .loss .due .to .terrain .is .a .major .driver .of .cost .that .can .be .estimated .by .choosing .appropriate .cell .sizes .for .different .types .of .terrain .and .different .frequency .bands . .

. The .cost .of .providing .fixed .wireless .broadband .service .is .directly .proportional .to .the .fraction .of .traffic .on .the .wire-less .network .from .fixed .service .

. Disbursements .will .be .taxed .as .regular .income .just .as .cur-rent .USF .disbursements .are .taxed .

. Large .service .providers .current .operating .expenses .pro-vide .a .proxy .for .the .operating .expenses .associated .with .providing .broadband .service .in .currently .unserved .areas .

These .principles, .decisions .and .assumptions .are .discussed .in .detail .in .Chapter .3 .

In .addition .to .the .key .assumptions .above, .there .are .nu-merous .other .assumptions .that .we .made .for .each .broadband .technology .we .examined . .In .order .to .accurately .model .each .technology, .we .had .to .understand .both .the .technical .capabili-ties .and .the .economic .drivers; .a .description .of .our .treatment .of .each .technology .is .provided .in .Chapter .4 . .

In .addition .to .this .technical .paper, .there .is .supplementary .documentation .describing .our .analysis .and .methods .including .CostQuest .Model .Documentation: .Technical .documentation .of .how .the .model .is .constructed, .including .more .detail .about .the .statistical .model .used .to .estimate .availability .and .network .infrastructure .in .areas .where .no .data .are .available .



1 . American .Recovery .and .Reinvestment .Act .of .2009, .Pub .L . .No . .111-5, . .6001(k)(2)(D), .123 .Stat . .115, .516 .(2009) .(Recovery .Act) .

2 . Note .the .figure .differs .slightly .from .Exhibit .8-B .of .the .first .printing .of .the .National .Broadband .Plan .(NBP) . .While .the .gap .remains .$24 .billion, .the .data .in .this .paper .are .updated .since .the .release .of .the .NBP; .future .releases .of .the .NBP .will .include .these .updated .data .

3 . As .a .threshold .matter, .the .level .of .service .to .be .supported .must .be .set . .This .service .is .the .National .Broadband .Availability .Target .which .specifies .downstream .speeds .of .at .least .4 .Mbps .and .upstream .speeds .of .at .least .1 .Mbps . .Support .for .this .target .is .discussed .briefly .in .Section .4 .and .in .detail .in .the .Omnibus .Broadband .Initiatives .(OBI) .technical .paper .entitled .Broadband .Performance .(forthcoming) .

4 . Homes .are .technically .housing .units . .Housing .units .are .distinct .from .households . .A .housing .unit .is .a .house, .an .apartment, .a .mobile .home, .a .group .of .rooms, .or .a .single .room .that .is .occupied .(or .if .vacant, .is .intended .for .occupancy) .as .separate .living .quarters . .In .contrast, .A .household .includes .all .the .persons .who .occupy .a .housing .unit . . . . . . . .The .occupants .may .be .a .single .family, .one .person .living .alone, .two .or .more .families .living .together, .or .any .other .group .of .related .or .unrelated .persons .who .share .living .arrange-ments . .There .are .130 .1 .million .housing .units .and .118 .0 .million .households .in .the .United .States . .U .S . .Census .Bureau, .Households, .Persons .Per .Household, .and .Households .with .Individuals .Under .18 .Years, .2000, .http://quickfacts .census .gov/qfd/meta/long_71061 .htm .(last .visited .Mar . .7, .2010) .

e n d n O T e s

O B I T e c h n I c a l P a P e r n O . 1 c h a P T e r 1


I. The InvesTmenT GaPOur .analysis .indicates .that .there .are .7 .million .housing .units .(HUs) .without .access .to .terrestrial .broadband .infrastructure .capable .of .meeting .the .National .Broadband .Availability .Target .of .4 .Mbps .download .and .1 .Mbps .upload . .Because .the .total .costs .of .providing .broadband .service .to .those .7 .million .HUs .exceed .the .revenues .expected .from .providing .service, .it .is .unlikely .that .private .capital .will .fund .infrastructure .capable .of .delivering .broadband .that .meets .the .target . .

We .calculate .the .amount .of .support .required .to .provide .100% .coverage .to .the .unserved .consistent .with .the .availability .target .to .be .$23 .5 .billion . .As .shown .in .Exhibit .1-A, .the .$23 .5 .billion .gap .is .the .net .shortfall, .including .initial .capital .expen-ditures .(capex), .ongoing .costs .and .revenue .associated .with .providing .service .across .the .life .of .the .asset .

Ongoing .costs .comprise .ongoing .capex, .network .operating .expenses .and .selling, .general .and .administrative .expenses; .the .present .values .of .these .costs .are .shown .in .Exhibit .1-B . .

Costs .and .the .gap .vary .dramatically .with .population .density, .with .the .least .densely .populated .areas .accounting .for .a .dis-proportionate .share .of .the .gap .(see .Exhibit .1-C) . .As .noted .in .the .NBP, .and .discussed .more .fully .in .the .Satellite .portion .of .Chapter .4, .the .highest-gap .250,000 .housing .units .account .for .$13 .4 .billion .of .the .total .$23 .5 .billion .investment .gap .

In .fact, .deployment .costs .and .the .gap .are .driven .largely .by .the .density .of .the .unserved, .as .will .be .discussed .here .and .in .

Chapter .2 .(see, .for .example, .Exhibits .1-F .and .2-D) . .Therefore, .satellite-based .broadband, .which .can .provide .service .to .almost .any .subscriber .regardless .of .location .and .at .roughly .the .same .cost, .could .be .an .attractive .part .of .the .overall .solution . .

We .rely .on .these .results .to .represent .an .aggregate, .nation-wide .figure . .We .are .more .cautious .with .results .in .specific .geographies .because .the .estimates .of .the .availability .of .broad-band .capable .networks .are .in .part .based .on .a .statistical .model .(see .Chapter .2 .for .more .detail) . .When .examined .at .a .very .granular .level, .the .availability .model .will .sometimes .overesti-mate .and .sometimes .underestimate .service .levels, .but .should .tend .to .balance .out .when .aggregated .to .larger .geographic .areas . .In .the .maps .throughout .this .section .we .aggregate .outputs .to .the .county, .but .data .should .still .be .considered .only .directionally .accurate . .Further .analysis .and .improved .source .data .would .be .required .to .refine .estimates .for .particular .geographies .

The .map .in .Exhibit .1-D .presents .the .Investment .Gap .for .each .county .in .the .country . .The .gap .in .each .county .is .calculated .by .adding .the .gap .of .all .census .blocks .in .that .county . .Since .most .counties .have .at .least .some .census .blocks .with .a .net .pres-ent .value .(NPV) .gap, .most .counties .have .an .NPV .gap . .Census .blocks .with .a .positive .NPV .(i .e ., .blocks .where .the .gap .is .nega-tive) .offset .losses .in .census .blocks .that .are .NPV .negative . .Thus, .counties .can .have .no .gap .if .they .are .currently .fully .served .(i .e ., .have .no .unserved), .or .if .the .total .NPV .in .the .county .is .positive . .Note .that .dark .blue .counties .have .a .gap .at .least .20 .times .higher .than .the .gap .in .the .light .green .counties .

Exhibit 1-A:Base-case Broadband Availability GapCash Flows Associated With Investment Gap to Universal Broadband Availability1

Initial capex Ongoing costs Total cost Revenue Investment gap

15.3

17.1 8.9

23.5

32.4

(in billions of USD, present value)



Exhibit 1-B:Breakout of Ongoing Costs by Category

2.8

11.8

17.12.5

Ongoing Capex Network OpEx SG&A Total

(in billions of USD, present value)Numbers do not sum due to rounding.

Exhibit 1-C:Gap by Census Blocks Ordered by Population density 6,000

5,500

5,000

500

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

0

6,500

Gap($ Millions)

Least Dense

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

13,000

Most Dense

Density (left axis)Investment gap (right axis)

(in millions of USD, present value)

Percentiles of Unserved Census Blocks

DensityHU/Mi2



Exhibit 1-D:Broadband Investment Gap per County

No gap$20 million gap

Alaska Hawaii

Conterminous United States

Legend

125

12562 5

2500

0 250

Miles500 750 1000

500250 1000

-70

-80

-80

-90

-90

-100

-100

-110

-110

-120

-120-130

40

40

30

30

-150

-150

-160

-160-170-180

-140 -130

70

60

50

-160

20

Broadband availability gap per county

However, .the .total .gap .per .county .tells .only .part .of .the .story . .High .county-level .gaps .can .be .driven .by .large .numbers .of .rela-tively .low-gap .housing .units .and/or .by .small .numbers .of .very .high-gap .housing .units . .Examining .the .gap .per .housing .unit, .as .shown .in .Exhibit .1-E, .highlights .counties .where .the .average .

gap .per .home .is .particularly .high . .This .calculation .simply .takes .the .total .gap .in .each .county .as .described .above, .and .divides .by .the .number .of .unserved .housing .units .in .that .county . .The .dark .blue .counties .have .a .gap .per .home .at .least .10 .times .higher .than .the .gap .per .home .in .the .green .counties .



As .one .might .expect, .one .of .the .major .drivers .of .cost, .and .consequently .the .gap, .is .the .density .of .unserved .housing .units .(i .e ., .the .number .of .unserved .housing .units .per .square .mile, .av-eraged .across .each .county) . .Areas .with .higher .density .as .shown .

Exhibit 1-E:Broadband Investment Gap per Housing Unit in Each County

No gap$25,000

Alaska Hawaii


Legend

125

12562 5

2500

0 250

Miles500 750 1000

500250 1000

-70

-80

-80

-90

-90

-100

-100

-110

-110

-120

-120-130

40

40

30

30

-150

-150

-160

-160-170-180

-140 -130

70

60

50

-160

20

Broadband Availability Gap per Housing Unit in Each County

in .Exhibit .1-F .generally .have .lower .gaps .per .housing .unit; .note .the .correlation .between .low .densities .in .Exhibit .1-F .with .higher .gap .per .housing .unit .in .Exhibit .1-E . .Although .density .is .not .the .only .driver .of .gap, .it .is .a .significant .one .



In .some .areas, .the .gap .exceeds .the .initial .capex .required .to .build .out .the .area . .These .areas .have .ongoing .costs .that .are .in .excess .of .their .revenuemeaning .even .a .network .with .construc-tion .fully .subsidized .by .public .funds .will .not .be .able .to .operate .

profitably . .Exhibit .1-G .shows .the .gap .for .each .county, .highlight-ing .those .where .the .gap .is .larger .than .the .initial .capex .(i .e ., .markets .that .require .ongoing .support), .colored .in .light .blue . .Areas .that .require .ongoing .support .generally .have .larger .gaps .

Exhibit 1-F:Density of Unserved Housing Units per Square Mile

Up to 1 unserved/sq mile15 unserved/sq mile510 unserved/sq milemore than 10 unserved/sq mile

Alaska Hawaii


Legend

125

12562 5

2500

0 250

Miles500 750 1000

500250 1000

-70

-80

-80

-90

-90

-100

-100

-110

-110

-120

-120-130

40

40

30

30

-1

the broadband availability gap

Documents